Another Attempt At Student Loan Forgiveness Is Moving Forward—And This Time You Can Opt Out

If you are eligible to have your student loans forgiven under President Joe Biden’s new attempt at broad relief for borrowers, but don’t want it, speak now.

Starting Thursday, borrowers with federal student loan debt will receive emails from the Department of Education describing the newest relief plan and giving them a chance to say “no thanks.” 

Biden’s fresh effort at student loan forgiveness would offer total or partial loan forgiveness to more than 20 million borrowers in certain situations. Eligible borrowers who don’t want their loans forgiven have until Aug. 30 to contact their student loan servicer to opt out, the Department of Education said Wednesday. 

Remind Me: What Are The New Rules?

The department estimates the new rules would go into effect in 2025 once finalized and would bring the total number of people who have had at least some of their loans forgiven under Biden administration policies to 30 million. That’s including the 4.8 million who already have had loans forgiven because of various other rule changes during Biden’s presidency.

That’s assuming, of course, that courts do not thwart the administration’s effort. Last year the Supreme Court struck down Biden’s proposal to forgive up to $20,000 per student loan borrower. And earlier this month federal courts temporarily blocked the administration’s new SAVE repayment plan as a part of an ongoing legal battle to permanently end the program. 

Under the latest proposal, borrowers who have been making payments on their loans for 20 years or more (25 for graduate school) would have the rest of their loans forgiven. Borrowers who owe more than they did when they started repaying would have up to $20,000 worth of interest knocked off their loans.

People who went to schools that fail the department’s standards for providing good financial value for their students would have their federal loans forgiven, as would people who would be eligible for forgiveness under an existing program but haven’t applied.

The department’s announcement Wednesday did not address a separate loan forgiveness program in the works, which would forgive loans of borrowers who are in financial distress and likely to default.

Why Would I Opt Out?

That the department is now offering people the chance to turn down loan forgiveness makes sense in the context of the legal obstacles Biden has faced when attempting to forgive federal student debt.

In 2022, Frank Garrison, a lawyer for the Pacific Legal Foundation, sued the Biden administration over its old student loan forgiveness plan, arguing that he was getting his loans forgiven against his will and would have to pay income taxes on the amount forgiven in his home state of Indiana.

Garrison dismissed his suit after the Supreme Court struck down the program in a separate case.